ESAB Corp (ESAB) 2022 Q4 法說會逐字稿

Good morning, and welcome to the ESAB's Fourth Quarter 2022 Earnings Conference Call. (Operator Instructions) Thank you. Mark Barbalato, Vice President of Investor Relations, you may begin your conference.

早上好，歡迎來到 ESAB 2022 年第四季度收益電話會議。 （操作員說明）謝謝。投資者關係副總裁 Mark Barbalato，你可以開始你的會議了。

Thanks, operator. Welcome to ESAB's Fourth Quarter 2022 Earnings Call. This morning, I'm joined by our President and CEO, Shyam Kambeyanda; and CFO, Kevin Johnson. Please keep in mind that some of the statements we are making are forward-looking and are subject to risks, including those set forth in our SEC filings and today's earnings release. Actual results may differ, and we do not assume any obligation or intend to update these forward-looking statements, except as required by law.

謝謝，運營商。歡迎來到伊薩 2022 年第四季度財報電話會議。今天早上，我們的總裁兼首席執行官 Shyam Kambeyanda 和我一起出席了會議；和首席財務官凱文約翰遜。請記住，我們所做的一些聲明是前瞻性的，並且存在風險，包括我們在 SEC 文件和今天的收益發布中提出的聲明。實際結果可能有所不同，除法律要求外，我們不承擔任何義務或打算更新這些前瞻性陳述。

With respect to any non-GAAP financial measures mentioned during the call today, the accompanying reconciliation information related to those measures can be found in our earnings press release and today's slide presentation.

關於今天電話會議中提到的任何非 GAAP 財務措施，與這些措施相關的隨附對賬信息可以在我們的收益新聞稿和今天的幻燈片演示中找到。

With that, I'd like to turn the call over to our President and CEO, Shyam Kambeyanda.

有了這個，我想把電話轉給我們的總裁兼首席執行官 Shyam Kambeyanda。

Thank you, Mark. Good morning, everyone, and thank you all for joining us today. 2022 was the beginning of a new era in ESAB's 118-year rich history. We had a strong finish to 2022 and are entering 2023 with positive momentum as we continue to shape ESAB for the future. Let me take a moment to highlight a few accomplishments.

謝謝你，馬克。大家早上好，感謝大家今天加入我們。 2022 年是 ESAB 118 年豐富歷史新紀元的開始。我們在 2022 年取得了良好的成績，並以積極的勢頭進入 2023 年，因為我們將繼續塑造 ESAB 的未來。讓我花點時間強調一些成就。

We successfully launched as an independent company. We are well positioned to compound value for our shareholders. We again demonstrated our innovation leadership by introducing several exciting new products, like Renegade VOLT, battery-powered welder, and our new heavy industrial product, the Warrior Edge. We took our business system, EBX, up a notch. Our EBX process helped drive price and working capital improvements in a challenging environment. Our strengthened balance sheet and robust cash flow funded 3 acquisitions that moved our strategy forward. We continue our progress on ESG initiatives, and I'll share more on this later.

我們作為一家獨立公司成功推出。我們有能力為股東創造複合價值。我們通過推出幾款激動人心的新產品再次展示了我們的創新領導地位，例如 Renegade VOLT、電池供電焊機和我們的新型重工業產品 Warrior Edge。我們將我們的業務系統 EBX 提升了一個檔次。我們的 EBX 流程有助於在充滿挑戰的環境中推動價格和營運資本的改善。我們強化的資產負債表和強勁的現金流為 3 項收購提供了資金，推動了我們的戰略向前發展。我們繼續在 ESG 計劃方面取得進展，稍後我將分享更多信息。

Before I highlight the fourth quarter, let me take a moment to acknowledge the hard work and commitment of our associates. They embody our purpose and values and have been relentless in their focus on our customers and key stakeholders.

在重點介紹第四季度之前，讓我花點時間感謝我們員工的辛勤工作和承諾。他們體現了我們的宗旨和價值觀，並一直不懈地關注我們的客戶和主要利益相關者。

Moving to Slide 3 and our performance in the fourth quarter. As I said before, we had a strong finish to 2022. Organic sales increased 11%, adjusted EBITDA rose 10%, and margins expanded to 17.4% as our EBX initiative drove margin and working capital improvement. We made 2 acquisitions in the fourth quarter that further strengthened our enterprise, shaping ESAB towards higher growth, lower cyclicality, higher margins and higher cash flow.

轉到幻燈片 3 和我們在第四季度的表現。正如我之前所說，我們在 2022 年取得了很好的成績。有機銷售額增長了 11%，調整後的 EBITDA 增長了 10%，利潤率擴大到 17.4%，因為我們的 EBX 計劃推動了利潤率和營運資本的改善。我們在第四季度進行了 2 次收購，進一步加強了我們的企業實力，使 ESAB 朝著更高的增長、更低的周期性、更高的利潤率和更高的現金流方向發展。

Moving to Slide 4. We met all of our key financial metrics, reflecting strong execution despite a challenging operating environment. Full year organic revenue grew 13%, all of our regions contributed to our growth. India and the Middle East were standout performers. We achieved $417 million of EBITDA, which was $7 million higher than the midpoint of our guidance. And we delivered $4.21 of EPS, which was $0.16 higher than the midpoint of our guidance.

轉到幻燈片 4。我們滿足了所有關鍵財務指標，反映出儘管經營環境充滿挑戰，但執行力強勁。全年有機收入增長 13%，我們所有地區都為我們的增長做出了貢獻。印度和中東表現突出。我們實現了 4.17 億美元的 EBITDA，比我們的指引中點高出 700 萬美元。我們交付了 4.21 美元的每股收益，比我們指導的中點高出 0.16 美元。

To appreciate the team's EBITDA performance, I would like to highlight that we absorbed approximately $10 million of unfavorable currency pressure or roughly $0.12 a share compared to our original guidance. And on free cash flow, we generated $219 million of cash with a strong finish in the fourth quarter. The key takeaway on this slide is ESAB delivered on all of its commitments. And we're on a clear, continuous improvement path towards our long-term strategic goals of 20% EBITDA and 100% free cash flow conversion.

為了欣賞團隊的 EBITDA 業績，我想強調的是，與我們最初的指導相比，我們吸收了大約 1000 萬美元的不利貨幣壓力或每股約 0.12 美元。在自由現金流方面，我們在第四季度產生了 2.19 億美元的現金，表現強勁。這張幻燈片的主要內容是 ESAB 兌現了所有承諾。我們正朝著 20% EBITDA 和 100% 自由現金流轉換的長期戰略目標邁進一條清晰、持續的改進道路。

Moving to Slide 5. Over the last 6 years, we worked hard to reshape our company. And with the recent acquisitions of Swift-Cut and Therapy Gas Equipment, we continue our journey to compound value. Therapy Gas Equipment strengthened our gas control business by broadening our product offering and extending our geographic reach. Like our Ohio Medical acquisition, Therapy Equipment Is immediately accretive to our margins. Swift-Cut is a leader in light industrial automated cutting and provides us with an opportunity to extend our process leadership as well as grow our aftermarket. Additionally, there's an opportunity to accelerate growth and expand margins by plugging in Swift-Cut's innovative products and solutions into our global distribution network.

轉到幻燈片 5。在過去的 6 年裡，我們努力重塑我們的公司。隨著最近對 Swift-Cut 和 Therapy Gas Equipment 的收購，我們繼續我們的複合價值之旅。 Therapy Gas Equipment 通過擴大我們的產品範圍和擴大我們的地理範圍來加強我們的氣體控制業務。就像我們收購 Ohio Medical 一樣，Therapy Equipment 會立即增加我們的利潤。 Swift-Cut 是輕工業自動化切割領域的領導者，為我們提供了一個機會來擴大我們的工藝領導地位以及發展我們的售後市場。此外，通過將 Swift-Cut 的創新產品和解決方案納入我們的全球分銷網絡，還有機會加速增長並擴大利潤。

Turning to Slide 6. Let me share an example of EBX at work. We're all aware of the supply chain issues at the start of 2022. We felt this was a perfect situation to use our powerful EBX tools to drive improvement. We use product line simplification, AI forecasting, enhanced standard work, improved shop floor gemba and glass boards to systematically optimize and improve our inventory levels. As the chart indicates, we were able to reduce inventory by $60 million over the course of the second half of 2022. In 2023, expect us to raise the bar and continue to reduce our inventory days.

轉到幻燈片 6。讓我分享一個工作中的 EBX 示例。我們都知道 2022 年初的供應鏈問題。我們認為這是使用我們強大的 EBX 工具推動改進的完美時機。我們使用產品線簡化、人工智能預測、增強的標準工作、改進的車間現場和玻璃板來系統地優化和提高我們的庫存水平。如圖表所示，我們能夠在 2022 年下半年將庫存減少 6000 萬美元。到 2023 年，預計我們將提高標準並繼續減少庫存天數。

Moving to our fourth quarter financials on Slide 7. As I mentioned before, fourth quarter sales grew 11% organically. Our markets remained resilient with particular strength in our emerging markets. Acquisitions added 2 points of growth and are performing as expected. Our integration and synergy plans are off to a good start. I recently had the opportunity to visit with our team at Ohio Medical for our 100-day integration plan review. This includes implementation of our strategic vision as a global leader in gas control equipment as well as leveraging EBX across the business to drive growth, margins and cash flow.

轉到幻燈片 7 上的第四季度財務數據。正如我之前提到的，第四季度銷售額有機增長 11%。我們的市場保持彈性，新興市場尤為強勁。收購增加了 2 個增長點，表現符合預期。我們的整合和協同計劃有了一個良好的開端。我最近有機會與我們在 Ohio Medical 的團隊一起訪問我們的 100 天整合計劃審查。這包括實施我們作為氣體控制設備全球領導者的戰略願景，以及在整個業務中利用 EBX 來推動增長、利潤和現金流。

It was evident that there was great energy in the room, Ohio Medical has fit right in, and the team is excited about our future opportunities together. Similarly, I'll be visiting both Swift-Cut and Therapy Equipment for their 100-day reviews in the second quarter. Continuing with the impact of EBX, we're pushing price to offset inflation, and our cadence of innovative new product introductions are driving excitement within our sales team and our customers.

很明顯，房間裡充滿了活力，Ohio Medical 恰到好處，團隊對我們未來的合作機會感到興奮。同樣，我將在第二季度訪問 Swift-Cut 和 Therapy Equipment 進行 100 天審查。繼續 EBX 的影響，我們正在推動價格以抵消通貨膨脹，我們創新的新產品推出的節奏正在推動我們的銷售團隊和客戶興奮。

I'm encouraged by the strength of our sales funnels and the activities that will drive both an increased share of wallet as well as bring new customers to ESAB. Strong price and cost-saving execution helped offset both inflation and currency headwinds in the quarter. As a result, EBITDA margins expanded 40 basis points year-over-year and 80 basis points sequentially.

我對我們銷售渠道的實力以及將推動錢包份額增加以及為 ESAB 帶來新客戶的活動感到鼓舞。強勁的價格和節約成本的執行有助於抵消本季度的通貨膨脹和貨幣逆風。因此，EBITDA 利潤率同比增長 40 個基點，環比增長 80 個基點。

Moving to Slide 8. Americas had a solid quarter and performed as expected. Sales rose 5% organically as the team executed on price. Volume in the Americas reflected a tough year-over-year comparison. We made strong progress on penetrating new channels, accelerating our product line rationalization and improving our operational efficiency. Acquisitions added 4 points of growth. As a result, adjusted EBITDA increased 9%, margins expanded by 20 basis points and 100 basis points on a sequential basis.

轉到幻燈片 8。美洲有一個穩定的季度，表現符合預期。由於團隊執行價格，銷售額有機增長 5%。美洲的銷量反映了艱難的同比比較。我們在開拓新渠道、加快產品線合理化和提高運營效率方面取得了長足進步。收購增加了 4 個增長點。因此，調整後的 EBITDA 增長了 9%，利潤率環比擴大了 20 個基點和 100 個基點。

Turning to Slide 9 and our EMEA and APAC segments, they had a strong quarter again. Our fourth quarter sales rose 15% organically, reflecting 8 points of price and 7 points of volume. Acquisitions added another 100 basis points. We saw particular strength in India and the Middle East. In the quarter, both regions made significant progress on equipment, digital solutions and automation sales. Adjusted EBITDA improved 10%. Margins expanded 60 basis points year-over-year, reflecting strong execution and despite being impacted by a strong U.S. [dollar].

轉向 Slide 9 和我們的 EMEA 和 APAC 部分，他們再次有一個強勁的季度。我們第四季度的銷售額有機增長了 15%，反映了 8 個價格點和 7 個數量點。收購又增加了 100 個基點。我們在印度和中東看到了特別的力量。本季度，這兩個地區在設備、數字解決方案和自動化銷售方面都取得了重大進展。調整後的 EBITDA 提高了 10%。利潤率同比擴大 60 個基點，反映出強大的執行力，儘管受到強勢美元的影響。

With that, let me turn it over to Kevin for Slide 10.

有了這個，讓我把它交給凱文看幻燈片 10。

Thanks, Shyam, and good morning, everyone. ESAB had another strong quarter for free cash flow, $35 million higher than the prior year and a cash conversion greater than 100%. I'm proud of the work the ESAB team has completed during the year, particularly on inventory, which we reduced by a further $30 million in the fourth quarter. We funded our new acquisitions with our strong free cash flow and ended the year with net leverage of 2.7x, 0.1x better than we expected last time we spoke. As we look forward to 2023, new technology is being implemented that will further improve our cash generation. We are confident of delivering on our long-term goal of cash conversion greater than 100% in the next few years.

謝謝，Shyam，大家早上好。 ESAB 的自由現金流又是一個強勁的季度，比上年增加 3500 萬美元，現金轉換率超過 100%。我為 ESAB 團隊在這一年中完成的工作感到自豪，尤其是在庫存方面，我們在第四季度進一步減少了 3000 萬美元。我們以強勁的自由現金流為我們的新收購提供資金，並以 2.7 倍的淨槓桿率結束了這一年，比我們上次談話時預期的高 0.1 倍。展望 2023 年，我們正在實施新技術，這將進一步提高我們的現金生成能力。我們有信心在未來幾年內實現現金轉換率超過 100% 的長期目標。

Turning to Slide 11. We provide our 2023 guidance. Our guidance numbers exclude our Russian business for the full year 2022 and 2023. Total sales growth is expected to be 2% to 4%, with sales seasonality similar to 2022. Organic growth of 3% to 5% includes 1 to 2 points of volume and the rest from price. We expect 2.5% from acquisitions and a 3.5% FX headwind due to a stronger U.S. dollar, impacting the first half of 2023. We expect a year-on-year incremental in the mid-20s with an adjusted EBITDA guidance of $420 million to $440 million. This includes $15 million of investment we are making to drive growth for our gas control and equipment products.

轉到幻燈片 11。我們提供 2023 年的指導。我們的指導數字不包括 2022 年和 2023 年全年的俄羅斯業務。總銷售額預計增長 2% 至 4%，銷售季節性與 2022 年相似。3% 至 5% 的有機增長包括 1 至 2 個百分點的銷量其餘的來自價格。由於美元走強，我們預計收購帶來 2.5% 的增長，而外匯逆風帶來 3.5% 的影響，這將影響到 2023 年上半年。我們預計在 20 年代中期實現同比增長，調整後的 EBITDA 指引為 4.2 億美元至 440 美元百萬。這包括我們為推動氣體控制和設備產品的增長而進行的 1500 萬美元投資。

As we discussed last year, we successfully fixed half of our debt at a 4% interest [rate], and we are assuming the Fed will increase the cash rate to around 5% by the end of Q2. Our interest expense is guided to $70 million to $72 million. 2023 adjusted tax rate is expected to be 24% to 25% with 50 basis point improvement at the midpoint versus 2022. We expect to consistently lower our adjusted tax rate over the next few years. Overall, 2023 adjusted EPS guidance is $3.80 to $4. Finally, our cash flow conversion guide is greater than 90%, as we continue to generate strong free cash flow with a similar quarterly seasonality to 2022. To assist with modeling, we have included a more detailed guidance slide in the appendix.

正如我們去年討論的那樣，我們成功地將一半的債務固定在 4% [利率]，我們假設美聯儲將在第二季度末將現金利率提高到 5% 左右。我們的利息支出預計為 7000 萬至 7200 萬美元。 2023 年調整後的稅率預計為 24% 至 25%，與 2022 年相比中間點提高 50 個基點。我們預計在未來幾年內將持續降低調整後的稅率。總體而言，2023 年調整後的每股收益指引為 3.80 美元至 4 美元。最後，我們的現金流轉換指南大於 90%，因為我們繼續產生強勁的自由現金流，季度季節性與 2022 年相似。為協助建模，我們在附錄中包含了更詳細的指導幻燈片。

With that, let me hand back to Shyam on Slide 12 to discuss our ESG progress.

有了這個，讓我回到幻燈片 12 上的 Shyam 來討論我們的 ESG 進展。

Thank you, Kevin. Let me highlight some of the exciting things we've been doing with ESG. At ESAB, we've established 5 work streams that are aligned to our purpose of shaping the world we imagine. We've reduced our footprint by 30%, as a result, reduced our energy, waste and water usage by the same proportion. We've improved our safety performance and our performance is in the 90th percentile amongst industrials. Every voice is valued at ESAB, and diversity is a big part of it.

謝謝你，凱文。讓我強調一下我們在 ESG 方面所做的一些令人興奮的事情。在 ESAB，我們建立了 5 個工作流，它們與我們塑造我們想像的世界的目標保持一致。我們減少了 30% 的足跡，從而減少了相同比例的能源、廢物和水的使用。我們提高了安全績效，我們的績效在工業企業中處於第 90 個百分位。 ESAB 重視每一種聲音，多樣性是其中的重要組成部分。

As part of our design process, all of our new products meet ecostandard designs. We use over 20% recycled steel in our consumables business and are making great progress on sustainable packaging for our products. Lastly, the communities we're part of, ESAB believes in participating and growing the communities we live in. As a result, our associates have volunteered and ESAB has funded several initiatives globally to ensure shared success. We are using ESG to make ESAB a better business for our customers, our associates and our communities.

作為我們設計過程的一部分，我們所有的新產品都符合生態標准設計。我們在耗材業務中使用超過 20% 的回收鋼材，並且在產品的可持續包裝方面取得了長足進步。最後，關於我們所屬的社區，伊薩相信參與和發展我們所居住的社區。因此，我們的員工自願參加，伊薩在全球範圍內資助了多項計劃，以確保共同成功。我們正在使用 ESG 使 ESAB 成為對我們的客戶、我們的員工和我們的社區來說更好的企業。

Turning to Slide 13 and to wrap up. I'm very proud of our team. ESAB delivered a strong year of performance in a challenging environment. There is more to come from EBX as we drive growth, expand margins and generate cash. We have a healthy funnel of bolt-on acquisitions as we continue our compounded journey. We have made strong progress on our ESG initiatives, and we'll be doing much more in this field. ESAB has had a solid start to the year.

轉到幻燈片 13 並結束。我為我們的團隊感到非常自豪。伊薩在充滿挑戰的環境中取得了強勁的表現。隨著我們推動增長、擴大利潤和產生現金，EBX 將帶來更多收益。隨著我們繼續我們的複合之旅，我們有一個健康的補強收購漏斗。我們在 ESG 計劃方面取得了長足進步，我們將在這一領域做更多的事情。 ESAB 今年開局良好。

And as I've said in the past, our best is yet to come. Thank you again for joining us. Operator, please open the line for questions.

正如我過去所說，我們最好的還在後頭。再次感謝您加入我們。接線員，請打開問題線路。

(Operator Instructions) Your first question comes from the line of Tami Zakaria from JPMorgan.

（操作員說明）您的第一個問題來自摩根大通的 Tami Zakaria。

So my first question is, it seems like volume in the Americas was down in the quarter, about 3%. Could you expand on that a little bit? What drove that? And what are you seeing now quarter-to-date?

所以我的第一個問題是，本季度美洲的銷量似乎下降了約 3%。你能稍微擴展一下嗎？是什麼驅使它？你現在看到了什麼？

Tami, thank you for the question. So the first aspect to answer your question is we actually performed as we expected in the Americas. We felt that we had a really strong performance in the quarter from a margin perspective. We made great progress with some of the initiatives that I spoke about, which was around creating new channels, driving better equipment sales, continue to win our share of wallet with our existing customers going forward.

塔米，謝謝你的提問。所以回答你問題的第一個方面是我們實際上按照我們在美洲的預期表現。從利潤率的角度來看，我們認為本季度的表現非常強勁。我們在我談到的一些舉措方面取得了很大進展，這些舉措圍繞著創造新渠道、推動更好的設備銷售、繼續與現有客戶一起贏得我們的錢包份額。

We did have a year-over-year comparable issues. If you remember from my call last year, the Americas business actually grew 31% in Q4 of last year. And we're also running the playbook around our product line rationalization, which is really the 80/20 strategy. And so for us, what we find in North America and South America that we're right where we want to be, we're positioning the business to be less cyclical, better margin and a better profile for long-term growth. I'm really thrilled about the work the team is doing to set ourselves up to sell more equipment, a better process automation in the market. And we're off to a good start in Q1, and so looking forward to how the business performs in the year.

我們確實有一個同比可比的問題。如果你還記得我去年的電話，去年第四季度美洲業務實際上增長了 31%。我們還圍繞我們的產品線合理化運行劇本，這實際上是 80/20 策略。因此，對於我們來說，我們在北美和南美髮現我們正處於我們想要的位置，我們正在將業務定位為周期性較低、利潤率更高和長期增長的更好形象。我真的很高興團隊正在做的工作是讓我們自己銷售更多設備，在市場上實現更好的過程自動化。我們在第一季度有了一個良好的開端，因此期待今年的業務表現。

Got it. And one more from me. Can you remind us which of your key end markets you still see sort of volumes below pre-COVID levels and enhance you expect some sort of recovery in the next couple of years?

知道了。還有一個來自我。您能否提醒我們，您的哪些主要終端市場的銷量仍低於 COVID 之前的水平，並增強您對未來幾年的某種複甦的預期？

Yes. We were really encouraged by how the emerging markets performed. I sort of highlighted in my commentary that we really -- we're thrilled with how the business in India, which, as you know, is a public company and is doing quite well, along with the Middle East business performed. So we really saw some really emerging shoots with a broad-based recovery and sort of activity above sort of COVID -- pre-COVID levels in the emerging markets. We're seeing the auto market recover in Europe, giving us a bit of tailwind as we finished out Q4, and we've started off nicely also in Q1.

是的。新興市場的表現讓我們深受鼓舞。我在評論中強調，我們真的 - 我們對印度的業務以及中東業務的表現感到興奮，正如你所知，印度是一家上市公司並且做得很好。因此，我們確實看到了一些真正新興的芽，具有廣泛的複蘇和高於 COVID 的某種活動——新興市場中 COVID 前的水平。我們看到歐洲汽車市場正在復蘇，在我們完成第四季度時給了我們一些順風，而且我們在第一季度也有很好的開端。

And in the North America market, we've seen sort of ag, and general industry continue to be strong, where we are seeing -- and we've been reading about the same is that the retail space is seeing a bit of a weakness on that particular front. But as I have mentioned before in some of my commentary that we're new to that space, so that every dollar of sales that we get is actually accretive to us. And so really excited about what that drives for ESAB in 2023.

在北美市場，我們看到了某種程度的農業，而一般工業繼續保持強勁，我們所看到的——我們一直在讀到同樣的信息，即零售領域有點疲軟在那個特定的戰線上。但正如我之前在我的一些評論中提到的那樣，我們是這個領域的新手，所以我們獲得的每一美元銷售額實際上對我們來說都是增值的。對 2023 年 ESAB 的推動力感到非常興奮。

Your next question comes from the line of Nathan Jones from Stifel.

您的下一個問題來自 Stifel 的 Nathan Jones。

I'd just like to pick up on part of your answer to one of those questions, Shyam. You talked about product rationalization through the use of 80/20. Maybe you could give us a bit more color around what's going on there? I know 80/20 is somewhat of a new initiative for ESAB. What kind of impact that could have to the sales number and what kind of impact that could have to the margins over the next few years?

Shyam，我只想了解你對其中一個問題的部分回答。您談到了通過使用 80/20 來實現產品合理化。也許你可以給我們更多關於那裡發生的事情的顏色？我知道 80/20 對 ESAB 來說是一項新舉措。在未來幾年內，這會對銷售數量產生什麼樣的影響，對利潤率產生什麼樣的影響？

Yes. So a couple of aspects. And I sort of ended my call by stating that we are exactly where we wanted to be positioned to invest in the things that we believe creates long-term value for all of our stakeholders. So 80/20 as an initiative, as you know, takes a bit of time to gain traction. Nathan, you've been around this a while, but really thrilled about what the North America team was able to do as we finished out the year. And the biggest portion of that exercise is that it's not just a pruning exercise. It's also a growth exercise as to where you want to see your business grow, where do you want to add value to your customers and where you see yourself creating a significant amount of efficiency within your shop floor and your facilities.

是的。所以有幾個方面。我在電話結束時說，我們正是希望投資於我們認為能為所有利益相關者創造長期價值的事物。因此，如您所知，80/20 作為一項倡議需要一些時間才能獲得關注。 Nathan，你來這裡已經有一段時間了，但對於北美團隊在這一年結束時能夠做的事情真的很激動。該練習的最大部分是它不僅僅是修剪練習。這也是一個關於您希望在何處看到您的業務增長、您希望在何處為您的客戶增加價值以及您看到自己在您的車間和設施中創造大量效率的增長練習。

So what I'd say to you is that we're in the early innings on that particular front. I expect us to be in the mid-innings as we go through 2023 and really drive significant value as we get into 2024. So as we sit here today, we're very confident about the goals that we set of creating a 20-plus EBITDA percentage business at ESAB. We think 80/20 is a big part of it, along with the mix change that we talked about, to gas control and equipment as we go through the next couple of years. We know exactly what we need to do. We've been talking to a few people that have done this in the past. We have a road map to get there. And so for us, it's about reaching the task of 20 and then taking it up a notch from there.

所以我要對你說的是，我們在那個特定的戰線上處於早期階段。我希望我們在 2023 年進入中期階段，並在進入 2024 年時真正推動重大價值。因此，當我們今天坐在這裡時，我們對我們設定的目標充滿信心，即創造 20 多個伊薩的 EBITDA 百分比業務。我們認為 80/20 是其中很重要的一部分，連同我們談到的混合變化，在我們接下來的幾年裡，將用於氣體控制和設備。我們確切地知道我們需要做什麼。我們一直在與過去做過這件事的一些人交談。我們有到達那裡的路線圖。所以對我們來說，這是關於完成 20 的任務，然後再提高一個檔次。

Great. My follow-up question is going to be on price/cost. Can you talk about where you ended the year on price/cost from a dollar basis and I assume price cost was probably dilutive to margins. So if you could give us the impact for that. And then the outlook for '23 where you expect to be on price/cost as we go forward here.

偉大的。我的後續問題將是關於價格/成本的。你能談談你在今年結束時以美元為基礎的價格/成本嗎？我認為價格成本可能會稀釋利潤率。所以，如果你能給我們帶來影響。然後是 23 年的前景，隨著我們在這裡前進，您期望價格/成本。

So yes, Nathan, as we've talked about before, we've built some very strong processes around the management of price and showing that we've got a good visibility of what's happening on the inflation side. So we've continued to play that playbook during 2022. As we exited the year 2022, we are price/cost neutral. As we stepped into 2023, we are continuing to see inflation across the world. We are in certain pockets, continuing to go after price to cover that inflation. And our assumptions in the 2023 guidance are that we will be price inflation neutral.

所以，是的，內森，正如我們之前談到的那樣，我們已經圍繞價格管理建立了一些非常強大的流程，並表明我們對通貨膨脹方面正在發生的事情有很好的了解。因此，我們在 2022 年繼續採用該策略。當我們退出 2022 年時，我們對價格/成本持中立態度。隨著我們步入 2023 年，我們將繼續看到世界各地的通貨膨脹。我們在某些口袋裡，繼續追求價格以彌補通貨膨脹。我們在 2023 年指南中的假設是我們將保持價格通脹中性。

Yes. I think, Nathan, on that front, one of the things that we've proved to ourselves over the last 3 years is our execution skills on it, whether it be related to inflation or FX. And so I think that stays solid within the DNA of our business and really strong EBX process. And as you know, as we look out into the horizon, we always expect to be price/cost neutral. We've got some activities that could end up being -- showing a bit of favorability, but otherwise, very confident in how we've set the business up.

是的。我認為，Nathan，在這方面，我們在過去 3 年中向自己證明的一件事就是我們在這方面的執行技能，無論是與通貨膨脹還是外匯有關。因此，我認為這在我們的業務和非常強大的 EBX 流程中保持穩固。正如你所知，當我們展望未來時，我們總是期望價格/成本保持中立。我們有一些活動最終可能會 - 表現出一點好感，但除此之外，我們對我們如何建立業務非常有信心。

And Kevin, when you say price/cost neutral, you're talking on a dollar basis, correct?

凱文，當你說價格/成本中立時，你是在以美元為基礎說話，對嗎？

That's correct, yes.

沒錯，是的。

Your next question comes from the line of Mig Dobre from Baird.

您的下一個問題來自 Baird 的 Mig Dobre 系列。

I want to follow up on this price discussion. One of the things that we're consistently hearing is that lower steel costs are starting to impact many of our corporate company P&L. So I guess I'm curious how you see that dynamic playing through to the consumable portion of your business? If there's any difference between first half and second half of '23 and the way you kind of framed your pricing outlook? And if you are able to hold price positive, what gives you that ability in an environment in which steel prices that [retrench with it]?

我想跟進這個價格討論。我們一直聽到的一件事是，較低的鋼鐵成本開始影響我們公司的許多公司損益表。所以我想我很好奇您如何看待這種動態影響到您業務的消費品部分？ 23 年上半年和下半年以及您構建定價前景的方式之間是否有任何差異？而且，如果您能夠保持價格積極，那麼在鋼鐵價格 [隨之縮減] 的環境中，是什麼讓您有這種能力？

Yes. Mig, great to hear from you. So let me start by saying, so we have seen steel prices abate a bit, but they're, for the most part, been stable. And in some regions, there's still some amount of volatility and inflation on steel prices. So it's not a broad-based retreat on steel prices across the globe. And to answer the second part of your question, which was, hey, in the past, what we've had is the ability to be able to hold on to price as commodities have abated. And that is, again, our intention this year. So far, the market continues to be rational. And obviously, our intention is to hold on to as much of that price on the way down as we possibly can. On the point around whether we see the second half, let me hand it over to Kevin, and he can sort of talk to you how we've sort of planned our pricing, at least in the guidance for the second half.

是的。米格，很高興收到你的來信。所以讓我首先說，我們看到鋼鐵價格略有下降，但在很大程度上是穩定的。在一些地區，鋼鐵價格仍然存在一定程度的波動和通脹。因此，這並不是全球鋼鐵價格的廣泛回落。並回答你問題的第二部分，嘿，在過去，我們擁有的是能夠在商品價格下降時保持價格的能力。這也是我們今年的意圖。至此，市場繼續保持理性。顯然，我們的意圖是在下跌過程中盡可能多地保持該價格。關於我們是否看到下半場的問題，讓我把它交給凱文，他可以和你談談我們是如何計劃我們的定價的，至少在下半場的指導中是這樣。

Yes. I mean in terms of comps in the first quarter in the first half of the year, you'll expect higher price year-over-year. The second half of the year, we are expecting to go for some price, but there will be less price in the second half of the year. I think the thing that we've proven out over the last few years is no matter what happens on the inflation side, we'll respond to that with price. We have extremely strong processes today within the business. And regardless if we do see more inflation, we'll go for more price. If we do see inflation [abate], we'll try to hold on to as much price as we can on the way down.

是的。我的意思是，就今年上半年第一季度的比較而言，你會預計價格會同比上漲。下半年，我們預計會有一些價格，但下半年的價格會更低。我認為過去幾年我們已經證明的事情是，無論通脹方面發生什麼，我們都會用價格來回應。今天，我們在業務中擁有極其強大的流程。而且不管我們是否確實看到更多的通貨膨脹，我們都會追求更高的價格。如果我們確實看到通貨膨脹 [減弱]，我們將嘗試在下跌過程中盡可能多地保持價格。

And then to answer a bigger piece of your question when you talked about how is it specifically impacting our consumer business. What we find is that there's other inflation that's out there, some of it associated with energy, some of it associated with the indirect pieces of it that allows us to continue to hold on to some of the price in spite of some of the steel or raw material costs, as you talked about going down. We see -- we've always liked the neighborhood that we're in on that front, Mig, and I know you and I have talked about that in the past. And so we continue to see the opportunity to be able to hold on and continue to push price into the market in case there's inflation-related activity out there.

然後當你談到它如何具體影響我們的消費者業務時，回答你的問題的更大一部分。我們發現還有其他通貨膨脹，其中一些與能源有關，一些與它的間接部分有關，這使我們能夠繼續保持部分價格，儘管有一些鋼鐵或原材料成本，正如你所說的下降。我們看到 - 我們一直喜歡我們在這方面所處的社區，米格，我知道你和我過去曾談過這個問題。因此，我們繼續看到能夠堅持並繼續將價格推入市場的機會，以防出現與通脹相關的活動。

Okay. Understood. If I may follow up then with a question on volume in your EMEA and APAC segment, 7%, and frankly, this was a lot better than what I was guessing. Can we get a little more color here on -- you talked about Middle East and India being strong, maybe what those regions contributed to this number? And maybe how Europe has progressed?

好的。明白了。如果我可以跟進一個關於你的 EMEA 和 APAC 部分的數量的問題，7%，坦率地說，這比我猜測的要好得多。我們能否在這裡獲得更多顏色 - 您談到中東和印度很強大，也許這些地區對這個數字有何貢獻？也許歐洲是如何進步的？

Yes. And as I mentioned earlier, our playbook on all of this is actually quite simple. We have a really strong process around our sales growth plan. We create really strong territory plans. We create regional plans off of it and then growth bridges within our business. And what we've seen over the last couple of years is our sales teams really inculcate that into the DNA and drive that as we move forward. So when you look at our EMEA and APAC business, we did see a lot of strength in India. The same things that we've spoken about in the past, Mig, we've seen investment in infrastructure. We've seen investment in ag. We've seen investment in renewables. And then also investment in LNG and oil and gas.

是的。正如我之前提到的，我們關於所有這些的劇本實際上非常簡單。圍繞我們的銷售增長計劃，我們有一個非常強大的流程。我們制定了非常強大的領土計劃。我們根據它制定區域計劃，然後在我們的業務中建立增長橋樑。我們在過去幾年中看到的是，我們的銷售團隊確實將其灌輸到 DNA 中，並在我們前進的過程中推動它。因此，當您查看我們的 EMEA 和 APAC 業務時，我們確實在印度看到了很多優勢。米格，我們過去談到過同樣的事情，我們已經看到了對基礎設施的投資。我們已經看到了對 ag 的投資。我們已經看到了對可再生能源的投資。然後還投資液化天然氣和石油和天然氣。

And so what you're seeing is that India is sort of benefiting in general for the general industry rising, especially ag and infrastructure, the Middle East on LNG, oil and gas and investments. And what I call in the Middle East, more slightly so that gives us a lot of confidence is the fact that it's a steady investment. It's not been the sort of massive investment upfront. It's been a steady state of investment within the Middle East region across all geographies there that's driving for capacity improvement, especially as it relates to LNG and processing of crude oil. So we really like those 2 spaces.

所以你所看到的是，印度總體上受益於一般工業的崛起，尤其是農業和基礎設施，中東的液化天然氣、石油和天然氣以及投資。我在中東所說的，更輕微地讓我們充滿信心的是，這是一項穩定的投資。這不是那種大規模的前期投資。中東地區所有地區的投資一直處於穩定狀態，這推動了產能的提高，尤其是與液化天然氣和原油加工相關的投資。所以我們真的很喜歡這兩個空間。

Europe, I mentioned it briefly in my commentary earlier, we're seeing the auto market rebound. And then just the market being resilient, and that's probably the best word that I could use for Europe. It continues to be resilient with some auto business coming back, a strong focus into renewables. The other piece that I'm really proud of our team on is that we had a chance to visit with a couple of customers this past week, and we're looking at building partnerships where we're providing digital, consumable and equipment solutions to our customers, creating a full workflow solution set, that's gained traction, giving us confidence about the mix change that we've talked about creating within ESAB where today, we're at about 70-30, and we'd like to continue to improve that over the next 3 to 5 years to get closer to 60-40. And so we're really pleased about our initial onset, how our sales teams have approached it, and more importantly, how the customers have engaged with us in that sales process.

歐洲，我之前在評論中簡要提到過，我們看到汽車市場正在反彈。然後就是市場有彈性，這可能是我能用在歐洲的最好的詞。隨著一些汽車業務的回歸，它繼續保持彈性，重點關注可再生能源。另一件讓我真正為我們的團隊感到自豪的事情是，上週我們有機會拜訪了幾位客戶，我們正在尋求建立合作夥伴關係，為他們提供數字、消耗品和設備解決方案我們的客戶，創建了一個完整的工作流程解決方案集，獲得了牽引力，讓我們對我們在 ESAB 中討論過的組合變化充滿信心，而今天，我們的比例約為 70-30，我們希望繼續在接下來的 3 到 5 年內將其提高到接近 60-40。因此，我們對我們最初的開始、我們的銷售團隊如何處理它以及更重要的是，客戶如何在銷售過程中與我們互動感到非常高興。

Okay. And if you'll allow me one final one, maybe this one is for Kevin. How are you thinking about working capital in 2023? You hinted at additional room to work down inventory. And as you're thinking about free cash flow, how would you frame your leverage and the way you're kind of looking at deploying capital, if at all, for 2022?

好的。如果你允許我最後一張，也許這一張是給凱文的。您如何看待 2023 年的營運資金？你暗示有額外的空間來減少庫存。當您考慮自由現金流時，您將如何構建您的槓桿以及您在 2022 年部署資本的方式（如果有的話）？

So firstly, I think Shyam already mentioned it as part of today's presentation. We do still see opportunity on inventory. When we look at the [DSI], we have certain parts of our business where we believe we are in a really good shape, but we have other parts of the business where we believe we have opportunity to improve. So certainly, as part of our implant for this year, we have targeted to make further strides in further reducing our inventory levels. So you'll see more to come on that part.

首先，我認為 Shyam 已經在今天的演講中提到了它。我們仍然看到庫存機會。當我們查看 [DSI] 時，我們認為我們在業務的某些部分處於非常好的狀態，但我們在業務的其他部分我們認為我們有機會改進。因此，當然，作為我們今年植入的一部分，我們的目標是進一步降低庫存水平。所以你會看到更多關於那部分的內容。

In terms of capital deployment, we're going to continue to be disciplined in our capital deployment. You've seen the acquisitions that we did in 2022. We funded that out of the free cash flow that we generated. We'll continue to manage our leverage within the 2x to 3x range, and we'll be focused on bolt-on M&A to smaller acquisitions that will immediately be accretive and don't require a great deal of cash to fund.

在資本部署方面，我們將繼續在我們的資本部署方面受到紀律處分。你已經看到了我們在 2022 年進行的收購。我們用產生的自由現金流為其提供資金。我們將繼續將我們的槓桿率控制在 2 倍到 3 倍的範圍內，我們將專注於補強併購和規模較小的收購，這些收購將立即產生增長，並且不需要大量現金來資助。

Yes. And I think the way to think about that one, Mig, is that what we have done today is created an optimal inventory state for each of the regions and more importantly, for each of our facilities. And through our EBX process and what I talked about is strong visual board, strong daily management, just to manage our plans to achieve or create a glide back to achieve that optimal inventory level. And so Kevin and I, something that Kevin has done incredibly well since he took over as our CFO has managed our cash, and I'm very confident between our EBX process and the processes that Kevin has put in place in terms of his weekly and daily management on cash that we are in a strong position to continue to deliver on our commitments on that front.

是的。 Mig，我認為考慮這一點的方法是，我們今天所做的是為每個地區，更重要的是，為我們的每個設施創建最佳庫存狀態。通過我們的 EBX 流程，我談到的是強大的視覺板，強大的日常管理，只是為了管理我們的計劃以實現或創建滑行以實現最佳庫存水平。所以凱文和我，自從他接任我們的首席財務官管理我們的現金以來，凱文做得非常好，我對我們的 EBX 流程和凱文在他的每周和日常現金管理，我們有能力繼續履行我們在這方面的承諾。

And your next question comes from the line of Chris Dankert from Loop Capital.

你的下一個問題來自 Loop Capital 的 Chris Dankert。

I guess looking at the 2023 organic sales guidance here, can you give us any detail Americas versus international? And maybe just kind of how you're looking about Europe specifically in terms of growth in '23 here?

我想看看這裡的 2023 年有機銷售指南，你能給我們提供美洲與國際的任何細節嗎？也許只是您如何看待歐洲，特別是在 23 世紀的增長方面？

Yes. We haven't broken that out yet, Chris. Let me sort of give that a little bit more consideration and get out. But in general, it's still early in the year and best to probably think about both regions performing at similar levels as we at least get -- get out of the gate very soon, it will be the second quarter, and we'll be able to give you a little more color on that particular front. But as of right now, probably best to assume that both businesses performing at similar levels as we exit. And as I've mentioned earlier, we're off to a good start to Q1. And so here in just about 8 weeks, we'll be out talking to you about the first quarter, so we'll be able to give you more color.

是的。我們還沒有解決這個問題，克里斯。讓我稍微考慮一下然後離開。但總的來說，現在還為時過早，最好考慮這兩個地區的表現至少與我們所得到的相似水平——很快就會走出大門，這將是第二季度，我們將能夠在那個特定的前面給你更多的顏色。但就目前而言，最好假設這兩家公司在我們退出時表現相似。正如我之前提到的，我們在第一季度有了一個良好的開端。因此，在大約 8 週後，我們將與您討論第一季度的情況，以便我們能夠為您提供更多顏色。

Understood. Sounds good there. And then forgive me if I missed it, but kind of circling back to Swift and Therapy Gas here. Is the sales contribution similar for each of those businesses? And then on an EBITDA margin basis, how do those kind of look versus company average here?

明白了。那裡聽起來不錯。如果我錯過了，請原諒我，但這裡有點繞回 Swift 和 Therapy Gas。每個企業的銷售貢獻是否相似？然後在 EBITDA 利潤率的基礎上，這些與公司平均水平相比如何？

Yes. I think we sort of mentioned already, we haven't given individual sales numbers, but I know it's in the back and you could sort of pull those numbers out. But $20 million is the total impact of those 2 businesses for the full year, with Therapy Equipment being accretive immediately. And I'm very confident that Swift-Cut has a really strong game plan where the gross margins are accretive today, and we expect EBITDA to get accretive as we finish out the year.

是的。我想我們已經提到過，我們沒有給出單獨的銷售數字，但我知道它在後面，你可以把這些數字拉出來。但 2000 萬美元是這兩項業務全年的總影響，而 Therapy Equipment 會立即增加。而且我非常有信心 Swift-Cut 有一個非常強大的遊戲計劃，今天的毛利率正在增加，我們預計 EBITDA 在今年結束時會增加。

Got it. And if I could sneak in one more. Maybe this is more for Kevin as well. Again, given some of the more uneven macro headlines and you highlighted the 2x to 3x debt leverage being a comfortable range. I guess, heading into a little bit of a [cloudier] your macro, does that change where you feel comfortable in that range? Or just any thoughts as we think about leveraging cash deployment going forward?

知道了。如果我能再偷偷進去一次。也許這對凱文也更重要。同樣，考慮到一些更不平衡的宏觀頭條新聞，您強調 2 倍至 3 倍的債務槓桿是一個舒適的範圍。我想，進入有點[雲]你的宏觀，這會改變你在那個範圍內感覺舒服的地方嗎？或者在我們考慮未來利用現金部署時有什麼想法嗎？

Yes. So the one thing, Chris, that ESAB's proven its strong ability to generate strong free cash flow. As we step back to during COVID, we actually generated over 130% and cash conversion over that period, given we're short cycle. We generally cycle down our inventory pretty quick when things turn. So that gives us a lot of confidence in terms of our abilities, strength of our balance sheet to go through any type of debt that at this point, we don't see happening.

是的。因此，克里斯，ESAB 證明了其產生強大自由現金流的強大能力。當我們回到 COVID 期間時，考慮到我們的周期很短，我們實際上在那段時間產生了超過 130% 的現金轉換。當事情發生變化時，我們通常會很快循環減少庫存。因此，這讓我們對我們的能力、資產負債表的實力有很大信心，可以承受任何類型的債務，而在這一點上，我們還沒有看到發生這種情況。

Got you. Understood...

明白了明白了...

Yes. Maybe to highlight that, I think the view for us is that we want to stay within that 2.5 to 3 range and stay disciplined. The great thing about the acquisition strategy that we have and the funnel that we have, nothing sort of is out there that pushes us to move those targets. And so we're very confident that we can create, be a compounder, create a really strong global leader in gas control, strengthen our FABTECH business and stay well within that range of 2.5 to 3 in the foreseeable future.

是的。也許要強調這一點，我認為我們的觀點是我們希望保持在 2.5 到 3 的範圍內並保持紀律。我們擁有的收購戰略和我們擁有的渠道的偉大之處在於，沒有任何東西可以推動我們移動這些目標。因此，我們非常有信心我們可以創造，成為一個複合商，創造一個真正強大的氣體控制全球領導者，加強我們的 FABTECH 業務，並在可預見的未來保持在 2.5 到 3 的範圍內。

Great. And then best of luck in '23 here.

偉大的。然後在這裡祝你 23 年好運。

Thank you.

謝謝。

Thank you.

謝謝。

And there are no further questions at this time. Mr. Mark Barbalato, I'd like to turn the call back over to you for some final closing remarks.

目前沒有其他問題。 Mark Barbalato 先生，我想將電話轉回給您，請您作最後的結束語。

Thank you for joining us today, and we look forward to speaking to you on our next call.

感謝您今天加入我們，我們期待在下次通話中與您交談。

This concludes today's conference call. Thank you for your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。